ECOBALT SOLUTIONS COM NPV (OTCMKTS:ECSIF) Is A Top Cobalt Play

ECOBALT SOLUTIONS COM NPV (OTCMKTS:ECSIF), the mining company focused on the exploration and development of mineral resources of cobalt and copper, has recently become very interesting. Why? The company made an update regarding its 100% owned Idaho Cobalt Project, wherein it was noted that the company had achieved many key milestones.SourceIn this article, we will review this news as well as the financial situation of the company. We discovered that the balance sheet is quite solid, the company has plenty of cash on hand, very little in liabilities, and is trading close to its book value per share. First of all, have a look at the recent price action:SourceeCobalt and its Cobalt Mine - EVs and rechargeable batteriesThe company was founded on June 13, 1988 in British Columbia. The business objective of the company is the exploration of mineral properties. eCobalt has proudly admitted in its last 10-K that it owns measured and indicated natural resources of cobalt and copper. The main project is located in the state of Idaho ("ICP"). It is 100% owned. The assets consist of a mine and mill in Lemhi County outside of the town of Salmon, Idaho. The feasibility level study showed in 2007 that the mine contains high purity cobalt metal, thus the United States Department of Agriculture Forest Service approved the plan of operations. By November 2012, it had already completed two of three stages of construction at the mine and mill site. Furthermore, most importantly, the company showed on January 10, 2017 that the mine could produce cobalt sulfate crystals for the rechargeable batteries, and electric vehicles market. This is from the annual report:

"A National Instrument 43-101 compliant Revised Technical Report on the Preliminary Economic Assessment (“PEA”) on the ICP to produce cobalt sulfate crystals from the ICP suitable for the rechargeable batteries and electric vehicles market was filed on SEDAR on January 10, 2017. The Company announced successful metallurgical test work results on bench test production of cobalt sulfate crystals on March 3, 2016." Source

We have written many pieces about the growth registered by companies developing minerals to produce rechargeable batteries, electric vehicles, and such industries in general. Market participants may enjoy reading about LOTE, which is developing EV charging stations, or Kandi Technologies Group, Inc (NASDAQ: KNDI), which produces EVs in China. Additionally, SCTFF is another company developing cobalt mining assets in the United States.Recent Developments On May 31, 2017, the company put out a new technical operations’ update on the ICP. The following new key milestones were achieved. First of all, the resource model and its design is completed, and the mine design has been already given to a third party. Furthermore, the metallurgical testing has been completed and the company has produced some cobalt sulphate crystals that are being assessed by potential clients. Additionally, a Cobalt Production Facility has been secured in Blackfoot, Idaho. In the news, the company made a comment what we have been repeating for months: the demand for cobalt is growing.

"The outlook for the demand for cobalt, driven primarily from the rapidly growing rechargeable battery sector and electric vehicles remains bullish. This demand has been reflected in the commodities rapid price growth, where it appears to have stabilized over the past several weeks at around US$25.00 per pound. Cobalt contained in cobalt sulphate heptahydrate currently carries an additional premium of approximately 20%, as it does currently in China." Source

Additionally, it noted the strong financial situation of the company. Paul Farquharson, President & CEO of eCobalt, said the following:

"This strong balance sheet allows the Company to expand its technical team on the mining and process sides in anticipation of moving the project through the Feasibility Study into detailed engineering. It is also allowing us to actively pursue project financing options and undertake other opportunities to increase value for all our shareholders" Source

Market ReactionThe market got to know the technical operation update on May 31, 2017, but it wasn't until June 1, 2017 when the share price was pushed up. The share price went from $0.75 to $0.82 in only one day. The move continued a few days more, and the share price almost touched the level of $1.00 19 days later.SourceSolid Balance SheetThe most interesting part of the company, along with the fantastic time to invest in Cobalt, is the balance sheet. Have a look at how it stood as of February 27, 2017. The following are the most important accounts (1 CAD is $0.76):

• Cash and cash equivalents: $14.6 million
• Mineral properties: $16.5 million
• Property, plant and equipment: $30.8 million
• Total assets: $64.4 million
• Provision for site reclamation and closure costs: 3.5 million
• Total Liabilities: $4.5 million

If we take into account the fact that the total amount of outstanding shares is 102.8 million, the cash per share calculation results into $0.14 per share, whereas the book value per share is $0.62. As of June 19, 2017, the share price is $0.86. Hence, we believe that the market is currently undervaluing the value of the mine, its properties, and the future demand of cobalt. In our opinion, discounting the future revenues of the mineral that will be extracted and sold should return higher valuation of the company.ConclusionFirst, the company's cobalt mine seems to be ready to commence the production soon. Market participants seem to celebrate the news about the new developments. Hence, it seems that day traders are already smelling the revenues. Additionally, the indicated and measured properties have been registered on the balance sheet, thus the book value per share is quite high, and the share price is trading close to it. Additionally, the company has significant cash on the balance sheet. To sum up, this is an unknown stock by most American traders that are normally too focused on the US markets, and usually forget that there are opportunities in Canada as well. ECSIF looks to be a top cobalt play for investors looking for exposure to the space.We will be updating our subscribers as soon as we know more. For the latest updates on ECSIF, sign up below!Image courtesy of FlickrDisclosure: We have no position in ECSIF and have not been compensated for this article.